The FDIC Under a Microscope

The Federal Deposit Insurance Corporation is in the hotseat following the Wall Street Journal’s report of sexual harassment issues at the agency. Incidents of this nature tarnish the reputation of an agency that has brought so much comfort and financial security to the citizens of our great nation. The FDIC is a proud and extraordinary organization working tirelessly around the clock and around the world to overcome very real threats to the global financial system.

The shocking and shameful behavior described in the Journal article of certain individuals working at the FDIC is unconscionable and has no place in public service or the private sector. As Chairman of the FDIC during the late 1970s through the end of 1985, I was determined to do everything I could do to prevent and eliminate improper employee conduct, misogyny, racism, and other foul influences.

We made it clear to the staff about the need to eliminate discrimination in all its forms, including gender, race, sexual orientation, ethnic background, and religious beliefs. I appointed the first ever woman Regional Director and made it clear to the entire staff that this was just the first of many to follow. We made a point of hiring and promoting African Americans and other minorities in addition to women. Nearly everyone bought into the new culture at the FDIC.

Notably, four Chairpersons of the FDIC have been women in the decades following my tenure. I have great difficulty understanding how the FDIC has fallen behind on building and maintaining a strong culture of inclusion and caring for others. It is time for firm action to restore the FDIC as an exceptional place to work, learn, and support the best in public service.

What has reportedly happened concerning the treatment of women since I left the FDIC is something that should concern all of us. To the extent the investigations underway prove the accuracy of the reported abuses, it is abhorrent and must be stopped immediately. Unfortunately racial, sexual and other forms of discrimination have been present throughout the world, including in the both the government and private sectors. We need to do all we can do to eradicate these horrid practices and hold perpetrators fully accountable.

Apparently, some of the abuses occurred at the FDIC’s hotel at its training center in suburban Virginia, adjacent to the George Mason University campus. The FDIC’s hotel is cost-efficient and safe for the FDIC’s employees who come from throughout the world to participate in advanced training without having to leave the security of the FDIC’s campus. Because the FDIC shares its training center with other regulators throughout the US and other countries, it simply must be a very safe and cost-effective environment. If abusive practices have been taking place, they must be addressed and eliminated immediately. Anyone engaging in these abusive practices should be fired and subject to prosecution as appropriate.

The FDIC has retained a law firm to investigate the facts and recommend ways to prevent anything like this from happening in the future. Some board members of the FDIC want an even more independent review. I hope and believe the FDIC will do its best to deal firmly with anyone who was involved in these scandalous activities and will come up with tighter security and oversight measures to make sure these kinds of abuses, including sexual harassment and sexual and other discrimination, are relegated to the dustbin of history.

I was proud to lead the FDIC during one of the most important periods in its history when it resolved the thousands of banks and thrifts that failed, including some of the largest failures ever. The FDIC grew during the 1980s from some 3,000 employees to over 20,000 spread across the country. I’ve never seen more dedicated public servants who are constantly in motion handling bank failures in an orderly fashion, protecting depositors’ funds, preventing banking panics, and insuring economic stability.

The FDIC is needed now more than ever. The recent regional bank failures vividly demonstrated the need for the FDIC through its resolution of these institutions. With the current challenges in commercial real estate lending and interest margins compressed by higher interest rates there are other institutions at risk. 

This is no time for the FDIC to be sidelined by the political fallout from these issues. The recent problems at the FDIC can and must be cleaned up immediately. Let’s get it done – NOW.